Greece: Financial Sector Assessment Program-Technical Note on Regulation and Supervision of Less Significant Institutions

Supervision of less significant institutions (LSIs) is effective in Greece. The Bank of Greece (BoG) approach to LSI supervision is thorough, systematic and intrusive. The core of the supervisory approach is the Supervisory Review and Evaluation Process (SREP), an EU framework that BoG uses with adaptations for Greece, its local risks and environment. The process is transparent internally and to the LSIs themselves, with risks clearly identified and reflected in both supervisory actions and Pillar 2 capital add-ons. BoG benefits from robust independence and an ability to attract and retain staff with the desired skills and experience, as illustrated during the last recruitment process, and has increased resources to reflect changing needs (such as DORA implementation). However, there is a need for some medium-term resource planning and continued vigilance on emerging risks, such as Information Communication Technologies (ICT) and cyber, to ensure they are adequately resourced. Collaboration and coordination with other parties are effective, both internally (such as the AML supervisors) and externally (with other supervisors and authorities). One area where processes could be tighter and the framework better calibrated is the enforcement and sanctioning regime, where penalties might better reflect the offence and provide the right level of deterrence.